Outlook for the New Financial Year

As we welcome in a new financial year we thought it was time to take a look at what the experts are forecasting for the year ahead.

Overall, the economy is likely to have posted below-average growth of 2.5 per cent in 2014/15 though CommSec expects the record economic expansion to continue in 2015/16 with growth lifting to around 3.0 per cent.

For the second consecutive year, residential property, shares and bonds all increased over 2014/15 – widely considered a rare event. Returns on dwellings grew by around 13.3%. Sydney has been the market leader in growth, followed by Melbourne.

According to Corelogic RP Data, national market research experts, mortgage rates are expected to remain low. Obtaining a mortgage may become more difficult however as lenders make changes to lending policies which we have already seen. Lenders are lowering discounts and increasing deposits required for investment lending. The lenders measure for living expenses is going up, and the buffers used for existing and new debt has crept up also. We expect to see more of this from more lenders in the new financial year.

RP Data has forecast that the property market growth is expected to continue with of slower growth later in the year, as supply continues to trend beyond current record highs.

Other property markets in Australia are beginning to see the first signs of growth. Newcastle and Wollongong are both currently benefiting from their proximity to Sydney.

Sectors of the market in Brisbane, The Goldcoast and Sunshine Coast are also showing positive indicators for growth. RP Data suggest affordability in the Sydney and Melbourne markets may drive more buyers to these areas.

A decline in both the Perth and Darwin property markets has been linked to the resource sector. Key indicators in these markets include slowing value growth or falling home values, decreasing rental rates, declining sales and marked increase in the level of discounting to attract buyers.

RP Data concluded a mixture of market conditions across the country for this financial year. Sydney and Melbourne have been touted to continue as market leaders.